Buy 3 Food Stocks That Have Crushed The Industry In 6 Months

The Zacks Food-Miscellaneous industry is not in its best shape. Several companies in the space are grappling with inflated input costs for grains, vegetables, dairy items, meat and animal feed, among other commodities. Moreover, escalated logistics, warehouse and packaging expenses have raised the cost burden. Increased investments in promotions and brand building are other factors impacting food companies’ margins.

A number of companies such as Sysco Corporation (NYSE:SYY) , Campbell Soup (NYSE:CPB) , Kraft Heinz (NYSE:K) and Kellogg (NYSE:K) are dealing with cost pressure. Some of these companies expect the cost woes to linger, per their last earnings call. Apart from this, companies in the food space have been bearing the brunt of intense competition on grounds of pricing, product assortment and responsiveness to changing consumer preferences.

These have made things sour for the Food – Miscellaneous industry, which is ranked #187 (among the bottom 27%) out of more than 250 Zacks industries. Nonetheless, the space is not devoid of flavorful picks. Despite such roadblocks, there are food companies that are performing well on their focus on innovation, product launches and diversification, and solid pricing initiatives. Also, benefits from acquisitions and divestitures are helping these companies strengthen their portfolios.

These upsides along with stringent cost-containment and restructuring efforts have helped a host of players stand out in the food industry that has gained just 2.5% in the past six months. That said, let’s take a closer look at these three Food – Miscellaneous stocks, which carry a solid Zacks Rank and have crushed the industry in the past six months.

3 Delectable Picks in the Food Space

Darling Ingredients Inc. (NYSE:DAR) is undoubtedly a solid bet. The Zacks Rank #1 (Strong Buy) stock has rallied 48.9% in six months. The global provider of natural ingredients is benefiting from its diverse business model, extensive reach, rising demand for health and nutrition, and the focus on plant expansions. Darling Ingredients’ Diamond Green Diesel expansion is worth a mention, in particular.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Lamb Weston Holdings Inc. (NYSE:LW) is another promising pick. Carrying a Zacks Rank #2 (Buy), the Eagle, ID-based company’s shares have gained 38.4% in the past six months. Lamb Weston — which delivered a positive earnings surprise of 7.3%, on average, over the trailing four quarters — has been gaining from its focus on limited-time offerings, efficient price/mix, and efforts to boost offerings and expand capacity. The company is especially benefiting from strength in its Global segment. Notably, the global manufacturer, marketer and distributor of value-added frozen potato products has a long-term growth rate of 8.8%.

Investors can also count on The Hain Celestial Group, Inc. (NASDAQ:HAIN) . The New York-based company’s earnings beat the Zacks Consensus Estimate by about 7%, on average, in the trailing four quarters. Additionally, the Zacks Rank #2 stock has rallied 43.2% in six months. Notably, the company’s focus on SKU rationalization, Project Terra and acquisitions has been a major driver. Also, Hain Celestial’s transformation strategy bodes well.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>